A resource based view of micro-firm management practice
Journal of Small Business and Enterprise DevelopmentEmerald Article: A resource-based view of micro-firm management practiceFelicity Kelliher, Leana ReinlArticle information:To cite this document: Felicity Kelliher, Leana Reinl, (2009),"A resource-based view of micro-firm management practice", Journalof Small Business and Enterprise Development, Vol. 16 Iss: 3 pp. 521 - 532Permanent link to this document:http://dx.doi.org/10.1108/14626000910977206Downloaded on: 07-12-2012References: This document contains references to 45 other documentsCitations: This document has been cited by 3 other documentsTo copy this document: firstname.lastname@example.orgThis document has been downloaded 1366 times since 2009. *Access to this document was granted through an Emerald subscription provided by UNIVERSITY OF THE ARTS LONDONFor Authors:If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service.Information about how to choose which publication to write for and submission guidelines are available for all. Please visitwww.emeraldinsight.com/authors for more information.About Emerald www.emeraldinsight.comWith over forty years experience, Emerald Group Publishing is a leading independent publisher of global research with impact inbusiness, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, aswell as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization isa partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archivepreservation. *Related content and download information correct at time of download.
The current issue and full text archive of this journal is available at www.emeraldinsight.com/1462-6004.htm POINTS OF VIEW Micro-ﬁrm management A resource-based view of practice micro-ﬁrm management practice 521 Felicity Kelliher School of Business, Waterford Institute of Technology, Waterford, Ireland, and Leana Reinl ´Failte Ireland Tourism Learning Network South and Southeast Support Ofﬁce, School of Business, Waterford Institute of Technology, Waterford, IrelandAbstractPurpose – The purpose of this paper is to discuss a resource-based approach for exploring micro-ﬁrmmanagement practice, as informed by the relevant literature. Speciﬁcally, the paper analyses availableliterature and catalogues micro-ﬁrm and managerial competence criteria in pursuit of managerialinsights in this environment.Design/methodology/approach – A comprehensive literature review precedes theconceptualisation of micro-ﬁrm management practice.Findings – Literary ﬁndings suggest that, considering micro-ﬁrms’ internal resource constraints,minimal environmental power, and owner-centred culture, it is vital for these organisations to embedtheir valuable resource in their core business strategy, to ensure survival in the longer term.Furthermore, there is an assumption that knowledge must be used optimally within the micro-ﬁrm bydeveloping the analytical and critical skills of individuals, groups and the entire organisation so as tosustain and grow these ﬁrms’ competitive advantage. Having identiﬁed and catalogued a range offactors that impact micro-ﬁrms, the authors propose a “resource taxonomy of micro-ﬁrm managementpractice”, which establishes factor interaction and the interrelationships between each resource in thisenvironment. The purpose of this taxonomy is to assist in the analysis of management practices in themicro-ﬁrm milieu.Research limitations/implications – The authors go on to discuss taxonomy implications formicro-ﬁrm training policy and propose further exploration of micro-ﬁrm management practice andresource-based research in this environment.Originality/value – Academic research, which focuses speciﬁcally on the micro-ﬁrm, has historicallybeen rare, despite multiple calls to study these ﬁrms in their own right. By proffering a “resourcetaxonomy of micro-ﬁrm management practice”, the authors seek to inform this neglected research area.Keywords Resource management, Management activities, Small enterprisesPaper type Conceptual paperIntroductionDespite multiple calls to study micro-ﬁrms in their own right (Devins et al., 2005;Matlay, 1999; Roberts and Wood, 2001), academic research, which focuses speciﬁcallyon the micro-ﬁrm, has historically been rare. From a resource perspective, calls for Journal of Small Business andsmall ﬁrm research are also forthcoming, as articulated by Barney et al. (2001, p. 634): Enterprise Development Vol. 16 No. 3, 2009 [. . .] much of the focus of [Resource-based View] RBV research has been on larger ﬁrms, yet pp. 521-532 q Emerald Group Publishing Limited smaller ﬁrms also face the need to acquire critical resources to create a sustainable 1462-6004 competitive advantage. DOI 10.1108/14626000910977206
JSBED The research that has been done, while fragmented, has found that micro-ﬁrms are16,3 intrinsically different in their organisational characteristics and approach to business problems and that these differences render many of the theories derived from studies of larger businesses inappropriate when applied to micro-ﬁrms. Speciﬁcally, management processes within a micro-ﬁrm are unique and micro-ﬁrms’ behavioural responses to issues that impact upon them differ fundamentally from those of larger ﬁrms (Kelliher522 and Henderson, 2006; Whaley, 2003), and should therefore be studied separately. As a relatively new research genre, recent literature has explored speciﬁc aspects of the micro-ﬁrm, including underlying resource poverty (Phillipson et al., 2004; Raley and Moxey, 2000), internal characteristics (Kelliher and Henderson, 2006), the competitive environment (Dutta and Evrard, 1999; Wyer, 1997), and their broad environmental inﬂuencers (Cook and Barry, 1995; Kuratko et al., 1999). Considering the growing interest in micro-ﬁrm research, the authors contend that there is a value in reviewing micro-ﬁrm literature as a collective, in order to catalogue these criteria for the purposes of exploring micro-ﬁrm management practice. It is these criteria that are the focus of this paper, as the authors discuss a resource-based approach for exploring micro-ﬁrm management, before proposing a resource taxonomy of micro-ﬁrm management practice, which establishes factor interaction and the interrelationships between each resource in this environment. The purpose of this taxonomy is to assist in the analysis of management practices in the micro-ﬁrm milieu. The authors go on to discuss taxonomy implications for micro-ﬁrm policy and propose further exploration of micro-ﬁrm management practice and resource-based research in this environment. Literature review There is no universal deﬁnition of a micro-ﬁrm, with many writers offering various criteria including size, number of employees and ﬁnancial turnover per annum (Devins et al., 2005; Greenbank, 2000; Roberts and Wood, 2001). In spite of these various criteria, deﬁnitions are usually based on employment, particularly in the European context. The European Commission deﬁnes a micro-enterprise as one who employs no more than ten full-time employees (Sheikh et al., 2002), and this deﬁnition is applied in the context of this paper. This deﬁnition is also taken as the baseline in terms of comparative literature, and where writers deﬁne “small ﬁrms” in the context of this deﬁnition, their ﬁndings are assumed to relate to the micro-ﬁrm milieu despite the small ﬁrm label. Factors that impact micro-ﬁrm management practices Considering the pre-deﬁned business entity and recorded differential between this and other organisations, it is relevant to investigate the factors that impact micro-ﬁrm management practices. These are found to encapsulate the ﬁrm’s business strategy, its organisational structure and the owner/manager’s decision process, the underlying business culture (incorporating internal communications and the owner’s pivotal role in a micro-ﬁrm), and ﬁnally, the organisation’s relationship with its business environment: The micro-ﬁrm business strategy. From a strategic perspective, micro enterprises tend to be more conservative than larger ﬁrms and are likely to change incrementally (Storey and Cressy, 1996) as a result. In fact, formal strategic planning is not common in small ﬁrms (Hall, 1995), a distinct disadvantage from Lyles et al.’s (1993) perspective. However, the view that micro-ﬁrms in particular do not plan at all may be a misnomer as there may still be clear mental frameworks of future plans regardless of whether
they are formally written down (Kuratko et al., 1999; Wyer, 1997). In fact, there is a Micro-ﬁrmprevalence of personal and subjective business objectives in micro-ﬁrms (Simpson, management2001), although the owner often holds these tacitly (Phillipson et al., 2004) withoutexplicitly communicating them to either the ﬁrm participants or the business practicestakeholders at large. As micro-ﬁrm competitive advantage is often built on localisedand tacit knowledge that can respond quickly to market signals (Wickham, 2001), anintuitive strategic approach is understandable in this milieu. Speciﬁcally, ﬂexible 523specialisation offers a unique advantage to these organisations and theowner/manager’s direct contact with customers, suppliers and employees presents adistinct advantage in the informal strategic planning process described above. Organisational structure and decision process. Mintzberg (1983) deﬁnes the simple ornon-structure (in the context of organisational structure) as comprising of directsupervision as the prime coordinating mechanism with centralisation as the main designparameter, resulting in all major decisions emulating from the structure’s centre. Themerging of ownership and management in the micro-ﬁrm setting creates a one-personcentred organisational structure (Dutta and Evrard, 1999; Palvia et al., 1994; Simpson,2001), which is ﬂat or horizontal, with centralised authority, minimal internalmanagement levels and a wide span of control. Therefore, the micro-ﬁrm is the epitomeof a simple structure, wherein the owner and employees are found to be closer to theircustomers due to the lack of management layers (Brady and Voss, 1995). Furthermore,these organisations encourage team and cross-functional orientations (Down, 1999) dueto their size and informal communication structure. Notably, this structure presentsgreater ﬂexibility and is therefore faster to respond and adapt to change. The micro-ﬁrm owner is usually responsible for all decision roles within the ﬁrm andhas a pivotal role in the organisation (Palvia et al., 1994). As a result, these ﬁrms are oftenless dependent on formal decision models (Rice and Hamilton, 1979), relying instead onthe owner’s intuition. Size is the prevailing inﬂuencer in this regard, as the smaller theﬁrm, the more power resides at the centre. Unfortunately, there is a resultant pressure onthe owner/manager to be an expert in all ﬁelds of management, and he or she is oftenconceived as the only one who can make management decisions as a result (Kelliher andHenderson, 2006). Ideally, it is the owner/manager who nurtures employee cooperationin the context of these paternalistic inﬂuences. However, the owner/manager’s pivotalrole in the organisational structure and culture can result in dominance of top-downcommunication, an issue that can impede the owner’s business aspirations. Micro-ﬁrm business culture. The micro-ﬁrm culture is, to a large extent, an extensionof the owner’s personality, as the owner plays a pivotal role in the organisation’s focusand ultimate success. Speciﬁcally, in cases where there is no divorce of ownership andcontrol, a micro-ﬁrm’s culture is often reﬂected in the motivations, values, attitudes andabilities of the owner/manager (Greenbank, 2000). The micro-ﬁrm’s culture lends itself toinformal narrative modes of communication (Penn et al., 1998), which have been found tobe inherently collaborative (Matlay, 1999). Notably, there is less internal uncertainty inthis environment as the owner is aware of conditions and sentiment through regularcontact with workers (Storey and Cressy, 1996), creating a link between the micro-ﬁrms’small size and more effective communications. However, a potential drawback is the factthat organisational messages are heard in the context of employee’s history asorganisational members, and may therefore be impacted by previously experiencedevents within the organisational setting.
JSBED Micro-ﬁrm relationship with its business environment. Research suggests that16,3 micro-ﬁrms have framed relations with the outside environment (Dutta and Evrard, 1999), wherein these ﬁrms have limited competitive inﬂuence, operating from their position in a perfectly competitive market (Simpson, 2001; Storey and Cressy, 1996). As internal and external interaction is paramount due to the more limited ability of micro-ﬁrms to shape their external environment (Smallbone et al., 1999; Kelliher, 2007),524 these ﬁrms combine internal and external perspectives to build an image of the individual ﬁrm from a competitive viewpoint on an ongoing basis. Unfortunately, this perspective can lead to micro-ﬁrm over-sensitivity to market changes (Whaley, 2003), and often results in a short-range management perspective on the part of the micro-ﬁrm. On a broader scale, government policy has an important impact on a micro-ﬁrm’s ability to compete in the marketplace. Speciﬁcally, public policy has been found to have a negative effect on micro-ﬁrms (Cook and Barry, 1995; Kuratko et al., 1999), as these ﬁrms have been found to lack inﬂuence at government level. Negative policies can include price, cost inequities, legislative compliance, regulatory liberalisation, competition restriction, paperwork burden, managerial restriction and mental burden (Bannock and Peacock, 1990; Kuratko et al., 1999). Based on the reviewed literature, modern external environments are sufﬁciently competitive such that, in order to survive, an organisation’s rate of learning must be faster than the rate of change in their environment (Barney et al., 2001; Hamel and Prahalad, 1994). Speciﬁcally, micro-ﬁrms feel heavy pressure from rapid changes in their environment as to customer demands, product life cycle and government regulation and legislation (Alstrup, 2000). Thus, while signiﬁcant knowledge may already be present in the micro-ﬁrm, external impulses are sometimes needed in order to trigger off internal development, and stimulate a learning dynamic within the ﬁrm. Consequently, an external impulse brought about by a new industry standard or regulation, or by dominant customer and supplier demands may challenge the organisation’s learning environment, at least in the short-term (Kelliher, 2007). However, when successfully incorporated into the micro-ﬁrm’s strategy, structure and culture, these external impulses should result in the emergence of a more competitive micro-business in the longer-term. Categorising the micro-ﬁrm The authors have explored speciﬁc research aspects of the micro-ﬁrm, including micro-ﬁrms’ internal characteristics, the micro-ﬁrm’s competitive environment, and their broad environmental inﬂuencers. By investigating micro-ﬁrm characteristics, the authors offer a visual representation of strategy, structure, culture and competitive setting from the micro-ﬁrm perspective. Considering the reviewed literature, the micro-ﬁrm environment has numerous criteria that can beneﬁt from being catalogued (Table I). Research has found that these person-centred organisations depend on the owner/manager to make decisions, present organic strategic plans, which can easily adapt to pre-deﬁned market dynamics and operate an organisation within the conﬁnes of a restricted pool of resource. A micro-ﬁrm’s success is therefore largely dependent on the owner/manager’s competence in successfully channelling these resources toward the development of organisational capabilities (a view supported by O’Dwyer and Ryan, 2000). Following categorisation of the micro-ﬁrm characteristics, the authors
investigated the micro-ﬁrms’ underlying resource constraints in pursuit of the paper’s Micro-ﬁrmobjective: “to establish a resource-based taxonomy of micro-ﬁrm management practice”. managementMicro-ﬁrm management practice – a resource-based view practiceBefore addressing the micro-ﬁrm’s resource criteria, it is of beneﬁt to deﬁne resource andrelated terms in this context. Resources are those tangible and intangible assets linked toa ﬁrm in a semi-permanent way, while capabilities are a way of accomplishing different 525activities, depending on available resources (Grant, 1991). Separately, competencies arethe integration of ﬁrm-speciﬁc assets into clusters spanning individuals and groups sothat they enable distinctive abilities (Teece et al., 1997). Thus, organisationalperformance is a consequence of ﬁrm-speciﬁc resources and capabilities enabled bymanagement competencies, as internal resource availability places a fundamental limiton an organisation’s plans, regardless of those resources obtainable on the open market(O’Regan and Ghobadian, 2004; Chandler and Hanks, 1994). The resource-based view is of particular relevance in the micro-ﬁrm context, as itcontends that long-term ﬁrm survival is contingent on a business’ unique offerings,and the development of this uniqueness over time through nurturing the ﬁrm’s corecompetencies. The crux of the resource-based view is that companies have a mixed bagof resources, so those that are valuable should be embedded in a set of functionalpolicies and activities to maximise a business’s potential success. It is widely accepted that micro-ﬁrms face “resource poverty”, which forces them tooperate under severe time, ﬁnancial and expertise constraints. Speciﬁcally, Phillipsonet al. (2004) and Raley and Moxey (2000) both cite inadequate internal resource as a factorin the vulnerability of micro-ﬁrms and an inhibitor in their development, operation andexploitation of opportunities. This issue can often manifest itself as a form of“short-termism” whereby these organisations may focus on short-term goals to thedetriment of long-term business objectives. Learning new capabilities can therefore bequite problematic in the micro-ﬁrm milieu, due to both employee capacity andthe underlying need for efﬁciency scale and growth in this environment (Pil and Holweg,2003). Thus, the resource perspective offers an opportunity to analyse micro-ﬁrmmanagement practice from an internal and external perspective.Key internal resource constraintsOwing to the limited number of staff in this environment, signiﬁcant pressure is placedon micro-ﬁrm employees to keep up a frenetic pace of activity (Dutta and Evrard, 1999)while being capable of performing multiple functions, often in multiple functional areas,Environmental inﬂuencers Internal characteristics (micro-ﬁrm) Owner/managerPower relationship Small size Paternalistic management styleDiseconomies of scale Niche strategy Central control and authorityExternally enforced change Incremental change Key decision makerPerfect competition Prone to short-term perspective Informal strategic plannerNegative regulatory impact Non/simple-structure Stakeholder proximity Resource poor Owner-centred culture Table I. Informal communications Micro-ﬁrm criteria On-the-job learning catalogue
JSBED within the organisational context (Dutta and Evrard, 1999; Floren, 2003). In reality, it is16,3 unlikely that micro-ﬁrms will have the resources to employ specialists, tending instead to employ staff with generalist skill sets (Simpson, 2001). There can also be a lack of career path for specialists in this type of organisation, and these ﬁrms often experience marginal labour markets (Curran, 1988) as a result. Time or lack thereof, is a particular concern in the micro-ﬁrm environment, where the owner is likely to be responsible for all526 aspects of the business operation. This time constraint often manifests itself in owners who are primarily interested in immediately applicable performance (Freel, 1999) as they are mainly concerned with the day-to-day demands of running their own business (Storey and Cressy, 1996), often to the detriment of long-term planning. Finally, the micro-ﬁrm has restricted access to funds (Freel, 1999), and is often reliant on personal sources of ﬁnance as a result. Unfortunately, limited ﬁnancial access may restrict larger investments that require a longer payback period, creating a growth barrier in these organisational settings. External resource perspective There is an obligation on the part of micro-ﬁrms to ensure knowledge is used optimally within the ﬁrm by developing the analytical and critical skills of individuals, groups and the entire organisation so as to sustain and grow the ﬁrm’s competitive advantage. This focus is primarily rooted in the resource-based theory of organisational competitiveness, suggesting that the micro-ﬁrm’s underlying unique competitive advantage is centred on their capacity to learn (Barney et al., 2001; Ruiz-Mercader et al., 2006). Unfortunately, micro-ﬁrm resource poverty can lead to information deﬁcits that hamper the propensity of micro-ﬁrms to be aware of, and respond to, environmental opportunities and threats (North et al., 2001, as cited in Phillipson et al., 2004), which in turn may restrict growth in these organisations. This issue can result in diseconomies of scale when competing in the marketplace, creating a cycle of decay on the part of the individual micro-ﬁrm. Developing managerial competence In addition to a ﬁrm’s accessibility to resources, Chandler and Hanks (1994) argue that business performance is also a function of managerial competence. This view is supported by O’Dwyer and Ryan (2000), Down (1999), Kelliher and Henderson (2006) and Greenbank (2000) in the micro-ﬁrm context. These writers acknowledge that the micro-ﬁrm owner’s experiences, skills and competencies are key inﬂuencers upon business survival and development, and each describes the owner/manager as a central resource of a business, providing resources that they have acquired through education and experience. Owner/manager attributes and capabilities can therefore impact positively or negatively upon business performance, as catalogued in Table II. The owner/manager’s attributes can drive motivation, positively impact communication and ultimately support an adaptive organisation. However, these ﬁndings are tempered with the reality that such people may also suffer from a short-term perspective, and promote centralised authority to the detriment of individual empowerment within the ﬁrm, potentially constricting future business success. Finally, the noted managerial competencies relate primarily to soft skills, wherein human development and learning potential are key criteria in the development of organisational capabilities in this environment.
Micro-ﬁrmOwner/manager Strength/attribute effective Weakness/ineffective Managerial competencies managementStrong willed Drive and Openness to suggestions and Learning and improving practice motivation less absorptive capacityPaternalistic Close Short-termism Leadership and directionmanagerial style communication 527Intuitive Tacit Ideas are not tested Idea and opportunity knowledge generationLack of reﬂection Organisational Incomplete learning transfer/ Development of human learning process resourcesInformal planner Adaptive Employees lacking objectives, Identiﬁcation of short and Table II. responsibility and vision of the longer term learning needs Micro-ﬁrm managerial future competence catalogueResource taxonomy of micro-ﬁrm management practiceWhile cataloguing was a valuable means of identiﬁcation of micro-ﬁrm criteria andmanagerial competence (Tables I and II), the problem of effectively cataloguing andretrieving unstructured information is eternal (Palmer and Frappaolo, 2004). Therefore,taxonomy offers conceptual organisational structure when applied to business contentand managerial competence (Figure 1). The taxonomy construction and classiﬁcationseeks to identify micro-ﬁrm criteria in the context of component interrelationships,facilitated by owner/manager competence. Thus, the taxonomy aids in theidentiﬁcation of sub-topics to focus on in the ﬁrst instance, offering insight into themicro-ﬁrm’s resource-based management practices. The proposed taxonomy seeks to establish the resource criteria andinter-relationships in micro-ﬁrm management practice. It is therefore important tolook at the micro-ﬁrm’s overriding strategy in the context of resource availability,internal capabilities and organisational competencies. The micro-ﬁrm strategy mustoperate in a resource-based framework, and each contributing factor, speciﬁcally themicro-ﬁrm’s strategy, structure, culture and leadership should facilitate the pursuit ofan optimum competitive stance in this environment. Thus, considering the micro-ﬁrmresource constraints, it is vital for these organisations to embed their valuable resourcein their core business strategy, to ensure survival in the longer term. Notably,micro-ﬁrms in their individual capacity lack power in the marketplace and are likely tobe beholden to the dominant partner’s requirements as a result. This suggests thatexternal inﬂuencers rather than core internal capability requirements dictate strategicworth. However, the beneﬁts of dynamic management competency development,which might lead to improved management practice and business performance in themicro-ﬁrm, have not previously been looked at in any detail. This is the underlyingpurpose of this paper. In Figure 1, the authors identify key micro-ﬁrm management competencies, whichare relationship management when interacting with the ﬁrm’s business environment,opportunity (resource) management at organisational level, the owner/manager’sleadership and communication skills within the ﬁrm, and the promotion of individuallearning underlying human resource development (HRD). By focusing on developingmanagement competence within this taxonomy, the owner/manager may focus onthose activities that contribute to the ﬁrm’s development and success in the long run.
JSBED M-F criteria (table I) Managerial competence16,3 (table II) Diseconomies of scale Relationship Environment Resource Power relationship (information) criteria management Regulatory impact528 Externally enforced change Non-structure Opportunity Organisation Resource Resource Poor (resource) criteria management Niche strategy Owner-centred culture Stakeholder proximity Inclusive Owner/manager Resource Informal planner (adaptive) criteria leadership Key decision maker Central authorityFigure 1.Resource taxonomy Marginal labour market HRD Individual Resourceof micro-ﬁrm management Generalists (individual criteriapractice learning) Restricted career path Speciﬁcally, considering the resource constraints mentioned earlier, the micro-ﬁrm owner/manger may be able to tap into valuable resources within a learning network environment by developing relationships, which could result in the development of dynamic internal management competencies. Within the organisation, an inclusive/adaptive leadership approach coupled with a primary focus on HRD should help hone employees’ specialist skills, and provide a wider career path for these individuals, ultimately contributing to organisational productivity. Notably, promoting internal communication and individual learning has been found to facilitate organisational learning over time in the micro-ﬁrm milieu, creating the potential for perpetual improvement in context. At an organisational level, resource-based opportunity management should help channel limited resource and individual learning into “value” strategies, strengthening capabilities despite resource constraints, and ultimately impacting competitive advantage. As the taxonomy is an inter-relational representation of the micro-ﬁrm management practice, each action results in reaction, creating a synergy of worth over time.
Policy implications Micro-ﬁrmThe proposed resource-based taxonomy of micro-ﬁrm management practice offers managementpolicy insight in relation to the business environment and individual andorganisational learning. practiceThe business environmentThe resource perspective indicates that there should be apportioned responsibility by 529size in relation to regulation (Martin, 2007). This approach has already beenimplemented in Australia’s HR policy (Southley, 2007). Furthermore, as small andmicro-ﬁrms often face a power imbalance in interaction with dominant trading partners(Kelliher, 2007), the resource perspective proffers micro-ﬁrm cooperative lobbying tochallenge competitive policy in pursuit of a more balanced business environment.Organisational and individual learningTo date, criticism has been levied on small and micro-ﬁrm training programmes(Greenbank, 2000), government initiatives (Matlay, 1999) and educational institutions(Taylor and Thorpe, 2004) for failing to address the learning and resource needs ofthese organisations. From a learning perspective, researchers appear uniﬁed in thebelief that generic training solutions originally designed for larger organisations fail toaddress the needs of the micro-ﬁrm (Greenbank, 2000; Devins et al., 2005; Down, 1999,among others). The authors’ therefore contend that learning initiatives ought to focuson analytical and intuitive skill development on the part of the owner/manager, and thedevelopment of staff through individualised learning programmes (Figure 1).Considering less than 20 per cent of micro-ﬁrms survive longer than six years and30 per cent last less than 18 months (Storey and Cressy, 1996), there is an evident valuein customising micro-ﬁrm managerial competence development and employee learninginitiatives in this manner. From a policy perspective, appropriate interventionsaddressing speciﬁc training and learning requirements in the context of an individualﬁrm’s size, sector, structure and the owner/manager’s attributes (a view supported byJohnson, 2002) are far more likely to reap sustainable competitive returns by: . embedding the resource perspective in the design, development and implementation of the micro-ﬁrm’s business strategy (Teece et al., 1997; Grant, 1991); and . by honing managerial competence, the value of available resource can be enhanced in pursuit of sustainable commercial success (as advised by O’Regan and Ghobadian, 2004).ConclusionThis paper sought to establish a resource-based taxonomy of micro-ﬁrm managementpractice. The purpose of this taxonomy is to assist in the analysis of managementpractices in the micro-ﬁrm milieu. Assuming the micro-ﬁrm’s underlying uniquecompetitive advantage is centred on their capacity to learn at a faster rate than the rate ofchange in their environment, this taxonomy seeks to hone management practice inpromoting and capturing individual and organisational learning in this environment.Speciﬁcally, micro-ﬁrm management competencies are found to be relationshipmanagement when interacting with the ﬁrm’s business environment, opportunity(resource) management at organisational level, the owner/manager’s inclusive
JSBED leadership and communication skills within the ﬁrm, and the promotion of individual16,3 learning underlying HRD. The reviewed literature and extracted micro-ﬁrm taxonomy depicts a unique entity in the organisational management context. Speciﬁcally, the organisation’s minute size, paternalistic management style, intrinsic ﬂexibility and informal culture should all contribute to a contextual understanding of micro-ﬁrm management, at least in theory.530 Unfortunately, underlying external and internal issues may curtail optimum management practices in this environment. In particular, centralised decision-making and control may create a constricted communication line within the micro-ﬁrm, resulting in a stunted internal culture. External regulatory and competitive pressures may produce a forced learning environment from the micro-ﬁrm perspective, creating competitive constrictions and ultimately causing a negative impact on organisational success. Pursuit and development of managerial competencies at each interaction point is therefore worthy of further investigation and the authors recommend research in the area of resource-based management practice and micro-ﬁrm managerial development in this regard. References Alstrup, L. (2000), “Coaching continuous improvement in small enterprises”, Integrated Manufacturing Systems, Vol. 11 No. 3, p. 165. Bannock, G. and Peacock, A. (1990), Governments and Small Business, Paul Chapman, London. Barney, J., Wright, M. and Ketchen, D.J. (2001), “The resource-based view of the ﬁrm: ten years after 1991”, Journal of Management, Vol. 27, pp. 625-41. Brady, A. and Voss, B. (1995), “Small is as small does”, Journal of Business Strategy, Vol. 16 No. 2, pp. 44-52. Chandler, G. and Hanks, S. (1994), “Market attractiveness, resource-based capabilities, venture strategies and venture performance”, Journal of Business Venturing, Vol. 9, pp. 331-49. Cook, R.G. and Barry, D. (1995), “Shaping the external environment: a study of small ﬁrms’ attempts to inﬂuence public policy”, Business and Society, Vol. 34 No. 3, pp. 317-45. Curran, J. (1988), “Training and research strategies for small ﬁrms”, Journal of General Management, Vol. 3, pp. 24-37. Devins, D., Gold, J., Johnson, S. and Holden, R. (2005), “Conceptual model of management learning in micro businesses – implications for research and policy”, Education & Training, Vol. 47 Nos 8/9, pp. 540-51. Down, S. (1999), “Owner-manager learning in small ﬁrms”, Journal of Small Business and Enterprise Development, Vol. 6 No. 3, pp. 267-80. Dutta, S. and Evrard, P. (1999), “Information technology and organisation within European small enterprises”, European Management Journal, Vol. 17 No. 3, pp. 239-51. Floren, H. (2003), “Collaborative approaches to management learning in small ﬁrms”, Journal of Workplace Learning, Vol. 15 No. 5, pp. 203-16. Freel, M.S. (1999), “Where are the skills gaps in innovative small ﬁrms?”, International Journal of Entrepreneurial Behaviour and Research, Vol. 5 No. 3, pp. 144-54. Grant, R.M. (1991), Contemporary Strategy Analysis: Concepts, Techniques, and Applications, Blackwell, Cambridge. Greenbank, P. (2000), “Training micro-business owner-managers: a challenge to current approaches”, Journal of European Industrial Training, Vol. 24 No. 7, p. 403.
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